An act relating to continued group health insurance and conversion health insurance. Be it enacted by the General Assembly of the Commonwealth of Kentucky




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UNOFFICIAL COPY AS OF 04/11/16 04 REG. SESS. 04 RS BR 2104

AN ACT relating to continued group health insurance and conversion health insurance.

Be it enacted by the General Assembly of the Commonwealth of Kentucky:

Section 1. KRS 304.18-110 is amended to read as follows:

(1) As used in this section:

(a) "Group member" means any person who is terminated from membership in a group and is eligible to continue group coverage under this section;

(b) "Group policy" means any policy of group health insurance[ policies] as defined in KRS 304.18-020 which;

1. Meets the definition of health benefit plan, as defined in KRS 304.17A-005(18);

2. Is issued by an insurer to a group of at least two (2) persons but no more than nineteen (19) persons covered under the policy on more than fifty percent (50%) of the typical business days in the previous calendar year; and

3. Is issued or renewed on or after the effective date of this Act[and blanket health insurance policies which the commissioner, in his discretion, designates as subject to this section, which:

1. Affect the rights of a Kentucky insured and bear a reasonable relation to Kentucky, regardless of whether delivered or issued for delivery in Kentucky;

2. Provide hospital or surgical expenses benefits, other than for a specific disease or accidental injury only; and

3. Are delivered, issued for delivery, or renewed after July 15, 2002];

(c)[(b)] "Medicare" means benefits provided under Title XVIII of the United States Social Security Act, 42 U.S.C. secs. 1395 et seq., as amended or superseded.

(2) Group members[Persons] insured under group policies have the right upon termination of group membership, other than termination for reason of gross misconduct, to continue coverage for themselves and their dependents upon meeting the following conditions:

(a) The group member has been covered by the group policy or any group policy it replaced for at least three (3) months; and

(b) Notice is given to the insurer and payment of the group rate is made to the insurer, by the group member or other eligible person, under subsection (6) of this section, within thirty-one (31) days after notice pursuant to subsection (6)[(7)] of this section.

(3) Continued group health insurance coverage shall terminate on the earlier of:

(a) The date eighteen (18) months after the date on which the group coverage would otherwise have terminated because of termination of group membership;

(b) If the group member fails to make timely payment of premium to the insurance company, the end of the period for which premium payment was made;[ or]

(c) The date the group policy is terminated and is not replaced by another group policy within thirty-one (31) days;

(d) The date the group member becomes covered under any other group health plan, which does not contain any exclusion or limitation with respect to any pre-existing condition of the group member; or

(e) The date the group member becomes entitled to benefits under Title XVIII of the Social Security Act, 42 U.S.C. secs. 1395 et seq.

(4) If a group policy is replaced, by a succeeding insurer, persons under the continued group health insurance shall remain covered under the prior insurer's policy until it terminates in accordance with subsection (3) of this section.

(5) The right to continue group health insurance coverage shall also be available:

(a) To the spouse of a group member:

1. Upon the group member's termination from group membership;

2. [To the surviving spouse, ]At the death of the group member[, with respect to the spouse and such children whose coverage under the group policy would terminate or terminates by reason of the death of the group member];

3. Upon the divorce or legal separation from the group member; and

4. Upon the group member becoming entitled to Medicare; or

(b) To the dependent children of the group member:

1. Upon the group member's termination from group membership;

2. At the death of the group member;

3. Upon the divorce or legal separation of the group member;

4. Upon the group member becoming entitled to Medicare; and

5. Upon the loss of dependent child status under the group policy.

[(b) To a child solely with respect to himself upon termination of membership in the group or his coverage by reason of operation of the limiting age of coverage under the group policy while covered as a dependent thereunder; or

(c) To a former spouse for himself and such children of whom he is awarded custody when coverage under the group policy would terminate or terminates by reason of termination of dependency as defined in the group policy and resulting from an order dissolving the marriage entered by a court of competent jurisdiction.

(6) Continuation of group health insurance coverage need not be granted in the following situations:

(a) On the effective date of coverage, the applicant is or could be covered by Medicare;

(b) On the effective date of coverage, the applicant is or could be covered by another group coverage (insured or uninsured).]

(6)[(7)] Notice of the right to continue group health insurance coverage shall be given as follows:

(a) For group policies delivered, issued for delivery, or renewed on or after the effective date of this Act[after July 15, 2002], the insurer shall give written notice of the right to continue group health insurance coverage to any group member entitled to continue coverage under this section upon notice from the group policyholder that the group member has terminated membership in the group. The thirty-one (31) day period of subsection (2)(b) of this section shall not begin to run until the notice required by this paragraph is mailed or delivered to the last known address of the group member;

(b) If a group member becomes entitled to obtain continued health insurance coverage, pursuant to this section, and the insurer fails to give the group member written notice of the right, pursuant to this subsection, the insurer shall give written notice to the former group member as soon as practicable after being notified of the insurer's failure to give written notice of continuation rights to the group member and such group member shall have an additional period within which to exercise continuation or conversion rights. The additional period shall expire sixty (60) days after written notice is received from the insurer. Written notice delivered or mailed to the last known address of the group member shall constitute the giving of notice for the purpose of this paragraph. If a group member makes application and pays the premium for continued health insurance coverage within the additional period allowed by this paragraph, the effective date of continued health insurance coverage shall be the date of termination from the group. However, nothing in this subsection shall require an insurer to give notice or provide continuation coverage to a former group member ninety (90) days after termination of the former group member's group coverage.

(7) An insurer issuing a continuation policy under this section shall not charge more than one hundred two percent (102%) of the cost of the plan for similarly situated individuals covered under the group policy who have not experienced a continuation qualifying event.

Section 2. KRS 304.18-114 is amended to read as follows:

(1) As used in this section:

(a) "Conversion health insurance policy[coverage]" means a health benefit plan meeting the requirements of this section and regulated in accordance with Subtitles 17 and 17A of this chapter;

(b) "Former group member" means any person who is:

1. Covered under a group policy as defined in Section 1 of this Act;

2. Terminated under the group policy for any reason, including the termination of a continuation policy pursuant to Section 1 of this Act; and

3. Entitled to a conversion policy pursuant to this section;

(c) "Group policy" has the meaning provided in KRS 304.18-110; and

(d)[(c)] "Medicare" has the meaning provided in KRS 304.18-110.

(2) An insurer providing group health insurance coverage shall offer a conversion health insurance policy, by written notice, to any former group member terminated under the group policy for any reason.[ The insurer shall offer a conversion health insurance policy substantially similar to the group policy.] The former group member shall meet the following conditions:

(a) The former group member had been a member of the group and covered under any health insurance policy offered by the group for at least three (3) months;

(b) The former group member must make written application to the insurer for conversion health insurance coverage not later than thirty-one (31) days after notice pursuant to subsection (6)[(5)] of this section; and

(c) The former group member must pay the monthly, quarterly, semiannual, or annual premium, at the option of the applicant, to the insurer not later than thirty-one (31) days after notice pursuant to subsection (6)[(5)] of this section.

(3) An insurer shall offer the following terms of conversion health insurance coverage:

(a) Conversion health insurance coverage shall be available without evidence of insurability and may contain a pre-existing condition limitation in accordance with KRS 304.17A-230;

(b) The premium for conversion health insurance coverage shall be according to the insurer's table of premium rates in effect on the latter of:

1. The effective date of the conversion policy; or

2. The date of application when the premium rate applies to the class of risk to which the covered persons belong, to their ages, and to the form and amount of insurance provided;

(c) The conversion health insurance policy shall cover the former group member and eligible dependents covered by the group policy on the date coverage under the group policy terminated; and

(d) The effective date of the conversion health insurance policy shall be the date of termination of coverage under the group policy[; and].

[(e) The conversion health insurance policy shall provide benefits substantially similar to those provided by the group policy, but not less than the minimum standards set forth in KRS 304.18-120 and any administrative regulations promulgated thereunder.]

(4) The department shall promulgate an administrative regulation in accordance with National Association of Insurance guidelines to set forth the benefits to be provided in the conversion health insurance.

(5) Conversion health insurance coverage need not be granted in the following situations:

(a) On the effective date of coverage, the applicant is or could be covered by Medicare;

(b) On the effective date of coverage, the applicant is or could be covered by another group coverage (insured or uninsured) or, the applicant is covered by substantially similar benefits by another individual hospital, surgical, or medical expenses insurance policy; or

(c) The issuance of conversion health insurance coverage would cause the applicant to be overinsured according to the insurer's standards, taking into account that the applicant is or could be covered by similar benefits pursuant to or in accordance with the requirements of any statute and the individual coverage described in paragraph (b) of this subsection.

(6)[(5)] Notice of the right to conversion health insurance coverage shall be given as follows:

(a) For group policies delivered, issued for delivery, or renewed on or after the effective date of this Act[after July 15, 2002], the insurer shall give written notice of the right to conversion health insurance coverage to any former group member entitled to conversion coverage under this section upon notice from the group policyholder that the group member has terminated membership in the group, upon termination of the former group member's continued group health insurance coverage pursuant to KRS 304.18-110 or COBRA as defined in KRS 304.17A-005(6), or upon termination of the group policy for any reason. The written notice shall clearly explain the former group member's right to a conversion policy.

(b) The thirty-one (31) day period of subsection (2)(b) of this section shall not begin to run until the notice required by this subsection is mailed or delivered to the last known address of the former group member.

(c) If a former group member becomes entitled to obtain conversion health insurance coverage, pursuant to this section, and the insurer fails to give the former group member written notice of the right, pursuant to this subsection, the insurer shall give written notice to the former group member as soon as practicable after being notified of the insurer's failure to give written notice of conversion rights to the former group member and such former group member shall have an additional period within which to exercise his conversion rights. The additional period shall expire sixty (60) days after written notice is received from the insurer. Written notice delivered or mailed to the last known address of the former group member shall constitute the giving of notice for the purpose of this paragraph. If a former group member makes application and pays the premium, for conversion health insurance coverage within the additional period allowed by this paragraph, the effective date of conversion health insurance coverage shall be the date of termination of group health insurance coverage. However, nothing in this subsection shall require an insurer to give notice or provide conversion coverage to a former group member ninety (90) days after termination of the former group member's group coverage.


Page of

BR210400.100-2104




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